When To Pay Bill For Best Credit Utilization Ratio?

For just about anything you want to get off your chest about credit cards.
7 posts
clifford_92FS
Green Member
Green Member
 
Posts: 5
Joined: Sat Dec 17, 2011 7:11 pm
Location: Richmond, VA

When To Pay Bill For Best Credit Utilization Ratio?

Postby clifford_92FS » Sun Dec 18, 2011 8:24 am

I have been reading, or interpreting what I read, about the credit utilization ratio and keep hearing conflicting arguments. I just recently found out about the 30% utilization ratio that you should strive for. I understand that but, I'm confused about when to pay my bill because I've also heard that paying in full (taking your balance to $0) means that credit card companies send a credit utilization ratio of 0% to reporting bureaus.

Here is my situation:

My credit card billing cycle starts/ends on the 22nd. My payment is due the following 17th. So right now I am in a billing cycle that lasts from 11/23/11-12/22/11 with my payment due on 01/17/12. As of the end of the day on the 22nd, my outstanding balance at that time is the balance that is on my statement. This is the balance sent to credit agencies, correct?

If this is the balance used for the credit utilization ratio, my last 5 statements had ratios of 45,45,38,58, and 27%. This balance on my statement, is also the amount that I completely pay before the following 17th, as opposed to only paying the $15 minimum.

Is this balance, the one reported on my statement and sent to the bureaus, the only one that matters? Meaning, I could pay down some of my balance to get below 30% before my cycle ends, or should I never take my balance above 30% even if it's in the middle of the billing cycle. I hope this makes sense. Thank you for reading, and I really am thankful for any help you can provide.

Cliff


DoingHomework
Centurion Member
Centurion Member
 
Posts: 707
Joined: Tue Sep 22, 2009 1:15 pm
Location: Arizona

Postby DoingHomework » Mon Dec 19, 2011 1:34 pm

clifford_92FS wrote:I have been reading, or interpreting what I read, about the credit utilization ratio and keep hearing conflicting arguments. I just recently found out about the 30% utilization ratio that you should strive for. I understand that but, I'm confused about when to pay my bill because I've also heard that paying in full (taking your balance to $0) means that credit card companies send a credit utilization ratio of 0% to reporting bureaus.


Whoever said that is wrong. Your utilization is not reported. What is reported is your available credit (limit) and you balance on a particular day. The reporting day has nothing to do with your closing date, due date, or anything else. It will be some random day during the month and it might change. As long as you pay in full by the end of the month you will be in good shape.

clifford_92FS wrote:Here is my situation:

My credit card billing cycle starts/ends on the 22nd. My payment is due the following 17th. So right now I am in a billing cycle that lasts from 11/23/11-12/22/11 with my payment due on 01/17/12. As of the end of the day on the 22nd, my outstanding balance at that time is the balance that is on my statement. This is the balance sent to credit agencies, correct?

If this is the balance used for the credit utilization ratio, my last 5 statements had ratios of 45,45,38,58, and 27%. This balance on my statement, is also the amount that I completely pay before the following 17th, as opposed to only paying the $15 minimum.

Is this balance, the one reported on my statement and sent to the bureaus, the only one that matters? Meaning, I could pay down some of my balance to get below 30% before my cycle ends, or should I never take my balance above 30% even if it's in the middle of the billing cycle. I hope this makes sense. Thank you for reading, and I really am thankful for any help you can provide.

Cliff


Generally speaking you should never take your balance above 30% of what is available. However, utilization is not a very "durable" factor. If you go to 90% one month then pay everything off you will be back to good credit within a month or two.

The bottom line is, if you keep your usage below 30% and pay responsibly for 6 months or so you limit will likely be raised so that you can spend more and still stay under the 30% limit. Just be patient.

clifford_92FS
Green Member
Green Member
 
Posts: 5
Joined: Sat Dec 17, 2011 7:11 pm
Location: Richmond, VA

Postby clifford_92FS » Mon Dec 19, 2011 5:28 pm

Thank you for your response. If I understand you correctly, credit utilization is only taken into consideration at one point in time. For example, it is not based on my average utilization over a certain time period, rather it is based on when the credit scoring agency looks at my utilization? So as long as my debt to credit limit ratio is low at that point, that percentage will be used to calculate my credit score or creditworthiness?

Again, sorry for all questions and no productive help on other threads. I am just beginning to understand all the different aspects of credit.

FutureBillionaire
Centurion Member
Centurion Member
 
Posts: 1589
Joined: Sun Jun 19, 2011 2:37 pm
Location: Down South

Postby FutureBillionaire » Mon Dec 19, 2011 5:45 pm

You want to pay your balance down before the statement date. My accounts show the statement balance when they report to credit bureaus. The balances reported to the bureaus determine your utilization rate. Pay down your statement before it prints, and you will be fine.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

DoingHomework
Centurion Member
Centurion Member
 
Posts: 707
Joined: Tue Sep 22, 2009 1:15 pm
Location: Arizona

Postby DoingHomework » Tue Dec 20, 2011 10:49 am

The balance shown on my credit reports is generally NOT the statement balance. It might be for you but that could be just a coincidence.

You utilization is also not calculate over time or on the date your credit card balance is reported. It is calculated on the date your credit report is pulled. For example,

Limit $1000

Card issuer reports on the 6th of every month

Balance reported on Nov 6 = $250
Statement issued on Nov 10 with balance of $350
Due date Nov 15, full balance paid off on Nov 12

Your utilization will likely show as $250/$1000 =25% until the new $100 balance is reported on Dec 6th, assuming you make no new purchases after

Does that make sense?

It's a kind of rolling thing. Some issuers report on the statement date, some do not. Some report the same day every month, some vary. Some will report on request if you pay off your card, etc. There are some general rules but every issuer is a little different.

FutureBillionaire
Centurion Member
Centurion Member
 
Posts: 1589
Joined: Sun Jun 19, 2011 2:37 pm
Location: Down South

Postby FutureBillionaire » Tue Dec 20, 2011 11:44 am

All of mine have reported the statement balance. It might not report to the bureau the same date that the statement balance posts.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

requiredfield
Gold Member
Gold Member
 
Posts: 47
Joined: Mon Sep 26, 2011 8:36 pm
Location: Lost in space

Postby requiredfield » Tue Dec 27, 2011 7:37 pm

Mine are all statement balances too.

To muddy things up here a bit...

Cards that don't report credit limits (Visa Sig/World MC) but high balances instead, still manage to report actual high balances, not statement balances.



Return to “General Credit Card Talk”

Who is online

Users browsing this forum: No registered users and 2 guests